SEATTLE--(BUSINESS WIRE)--HomeStreet, Inc. (Nasdaq:HMST) (the “Company” or “HomeStreet”), the
parent company of HomeStreet Bank (the “Bank”), announced today that the
Bank has executed a definitive agreement for Homebridge Financial
Services, Inc., (“Homebridge”) to acquire the assets of up to 50
stand-alone, satellite, and fulfillment offices related to the Bank’s
home loan center based single family mortgage origination business, and
to make offers of employment to HomeStreet’s related personnel (the
“Transaction”). Homebridge has agreed to a purchase price of the net
book value of the acquired assets (subject to adjustments) plus a
premium, as well as the assumption of certain home loan center and
fulfillment office lease obligations. In the event Homebridge realizes a
certain level of loan originations for the twelve months following the
closing of the Transaction, HomeStreet will be entitled to an additional
payment of $1 million at that time. The Transaction remains subject to
certain employee and branch office state licensing requirements and
other customary closing conditions, and is expected to be substantially
completed in the second quarter of 2019.

The Bank also announced that it has sold a significant portion of its
single family mortgage servicing rights. The transactions provide for
the sale of mortgage servicing rights related to single family mortgage
loans held by or pooled in securities guaranteed by Fannie Mae and
Freddie Mac with aggregate unpaid principal balances of approximately
$9.9 billion to New Residential Mortgage LLC, and the sale of mortgage
servicing rights related to single family mortgage loans pooled in
Ginnie Mae mortgage backed securities with aggregate unpaid principal
balances of approximately $4.4 billion to PennyMac Loan Services, LLC.
Together, these sales represent approximately 71.0% of HomeStreet’s
total mortgage servicing rights portfolio as of December 31, 2018. The
physical transfer of servicing from the Bank will take place in stages,
and is expected to be completed by August, 2019. HomeStreet will
continue to service the loans between the date of sale and the related
physical transfer dates.

In connection with these transactions, the Company’s Board of Directors
has approved a plan of exit pursuant to which the Company will no longer
consider Mortgage Banking to be a separate reportable segment of its
financial statements under generally accepted accounting principles
applicable to the Company. More information regarding this plan is being
disclosed by the Company in a Current Report on Form 8-K to be filed
concurrently with this press release. These actions are expected to be
substantially completed by June 30, 2019 and fully completed by December
31, 2019, and based on current estimates and assuming the full transfer
of offices and employees contemplated in the Transaction, the Company
expects to incur pre-tax charges of $5.4 million to $6.7 million for
severance and related benefit costs, $11.1 million to $13.5 million of
asset and technology related charges, and $3.0 million to $4.0 million
of other charges. The total charges resulting from this plan are
currently estimated to be approximately $19.5 million to $24.2 million.

Lastly the Board of Directors has also approved a share repurchase
program for up to $75 million in aggregate amount of shares of the
Company’s common stock from shareholders, which represents approximately
10.5% of the Company’s currently outstanding common stock based on the
closing price of the stock as of April 3, 2019. The Company may
repurchase shares from time to time in the open market, in privately
negotiated stock purchases or pursuant to any trading plan that may be
adopted in accordance with Rule 10b-18 and Rule 10b5-1 of the Securities
and Exchange Commission and applicable federal securities laws. The
share repurchase plan does not obligate the Company to acquire any
particular amount of common stock, and it may be modified or suspended
at any time at the Company’s discretion.

“The sale of the home loan center-based mortgage origination business
and related servicing rights will significantly reduce the size and
scope of HomeStreet’s single family mortgage operation,” said Mark K.
Mason, HomeStreet Chairman, President, and CEO. “These transactions
align with our long-term strategic goal of reducing our reliance on this
cyclical and volatile earnings stream and increasing our reliance on the
more stable earnings from our Commercial and Consumer banking business.
We believe our network of office locations and origination personnel
complements the existing Homebridge business well. We thank those
employees that are part of the Transaction for their hard work and
contribution to our success of converting a troubled thrift into a
leading West Coast, major market footprint, regional bank. The sale of
the servicing rights also provides the regulatory capital relief to not
only support the continued growth of our Commercial and Consumer banking
business, but also supports a share repurchase program underscoring our
confidence in HomeStreet’s future performance and long-term value
creation for our shareholders.”

HomeStreet was advised in the transaction by Keefe, Bruyette & Woods, A
Stifel Company as financial advisor and Mayer Brown LLP and Davis
Wright Tremaine LLP as legal counsel.

Forward-Looking Statements

This press release contains forward-looking statements concerning
HomeStreet, Inc. and HomeStreet Bank, and their operations, performance
and likelihood of success. All statements other than statements of
historical fact are forward-looking statements. In particular, certain
statements in this release are both forward looking and subject to
factors outside of our control, including market conditions, regulatory
decisions and the actions of third parties, that may impact our ability
to meet our expectations. This includes statements about the Company’s
anticipated future performance and financial condition, long-term value
creation, reduction in volatility, reliability of earnings, growth
expectations and future performance of the Company, the nature and
magnitude of expected charges related to our plan of exit for our home
loan center-based mortgage operations, which could differ materially
from our expectations, including in the event that we are not able to
complete our asset sale to Homebridge or are not able to transfer all of
the assets contemplated to be sold in that agreement, matters related to
the transactions announced herein, including the successful transfer of
all servicing rights pursuant to the agreements with New Residential and
PennyMac, which remain subject to closing conditions, and the Company’s
share repurchase plans. Forward-looking statements are based on many
beliefs, assumptions, estimates and expectations of our future
performance, taking into account information currently available to us,
and include statements about the competitiveness of the financial
services industry. Such statements involve inherent risks and
uncertainties, many of which are difficult to predict and are generally
beyond HomeStreet’s control. You should consider, among other things,
the risk factors included in our periodic reports filed with the
Securities and Exchange Commission, including but not limited to our
most recent Annual Report on Form 10-K for the year ended December 31,
2018. Forward-looking statements speak only as of the date made, and we
do not undertake to update them to reflect changes or events that occur
after that date.

About HomeStreet, Inc.

HomeStreet, Inc. (Nasdaq:HMST) is a diversified financial services
company headquartered in Seattle, Washington, serving consumers and
businesses in the Western United States and Hawaii through its various
operating subsidiaries. The company’s primary business following the
completion of these transactions will be community banking, including:
commercial real estate lending, commercial lending, residential
construction lending, single family residential lending for portfolio,
retail banking, private banking, investment, and insurance services. Its
principal subsidiaries are HomeStreet Bank and HomeStreet Capital
Corporation. Certain information about our business can be found on our
investor relations web site, located at http://ir.homestreet.com.